Nigeria’s Oil Investment Dips $4bn | Independent Newspapers Limited
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Nigeria’s Oil Investment Dips $4bn

Posted: Nov 23, 2015 at 9:19 am   /   by   /   comments (0)

*Projects locked up based on cost -Chevron

Multi-billion dollars oil projects in Nigeria, like the Bonga South West, have been locked up as Nigeria’s oil investments dipped by $4 billion in 2014. A report seen by New Telegraph at the weekend revealed this and added that Nigeria’s oil output may fall by 2017 if the investment draught continue.

Oil multi-national, Chevron, confirmed the Bonga SW project lock-up through its President in charge of Africa and Latin America exploration and production, Mr. Ali Moshiri. Moshiri declared at the justconcluded annual conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos that Nigeria,which accounted for $20 billion out of the $600 billion investment in the global oil and gas industry in 2014, suffered investment dip of $4 billion, which is a 20 per cent drop.

A senior Moody’s analyst, Aurelien Mali, added in a report that Nigeria’s oil output could drop by as much as 15 per cent by 2017 unless government attract more investment and resolve cash shortages at the Nigerian National Petroleum Corporation (NNPC).

Projects are currently held up because NNPC needs parliamentary and regulatory approval before it can spend anything. And officials and lawmakers are often six months late in giving their assent, making proposals irrelevant as costs exceed the original budgets. As a result, unpaid bills have piled up.

He said that the cash call funding issues for the joint ventures and the long term funding to drive the deep offshore fields was something that would have to be addressed to maintain the current production level of 2.3 million barrels. President Muhammadu Buhari, who also oversees Petroleum Ministry, recently gave the NNPC’s exploration joint ventures control over their own budgets as a way to overcome such cash shortages. Moshiri added that notwithstanding the investments draught, Nigeria remains the top producer of liquid hydrocarbon and number three in gas production in Africa.He explained that Nigeria’s number three position in gas was not because of lack of gas resources, but due to lack of gas infrastructure.

Moshiri stressed that Nigeria had more gas resources to the extent that the country could be number three or four in the world, but he insisted that the problem was lack of gas infrastructure. He stressed: “But when you talk about investment, total industry investment in 2014 was about $600 billion and Nigeria had around $20 billion.

After the price crash, there is tremendous reduction in global investment. Now the question you may ask: Is that reduction because of cost efficiency or reduction because of investment? They are not doing the same thing they did before and it is cheaper. As you can see, investment in Nigeria has significantly dropped by 20 per cent.” The country has tremendous capacity and resources to produce far above two million barrels of crude oil per day, but much investment would be required.

He disclosed that $20 billion investment would be required yearly for the country to replace its current production level. Moshiri noted that some projects were locked up in Nigeria because of cost identifying Bonga South West project as one of the projects. He maintained that the current slump in crude oil prices should not be a surprise to anyone as he had witnessed four of such decline in his 40 years in the oil and gas business.